Dan Ariely’s 2009 Ted Talks have accumulated over 3 million views. They captured my imagination and compelled me to read (and love) his book Predictably Irrational. So in early 2013 when I saw that he was teaching an online class through coursera.org, I registered without hesitation. After two weeks of class, I decided to write up how these lessons relate to my experience as a game designer. I’m leaving each week’s material within Prof. Ariely’s outline. I’ll then summarize the main point(s) and relate them to lessons in game design.

Before jumping into the first week’s materials, I’d like to quickly establish the connection between game design and behavioral economics (the subject of Dan’s ted talks, book, and coursera class). The critically acclaimed computer game designer Sid Meier is often quoted for saying that games are a series of interesting decisions. Behavioral economics is focused on how and why people choose to make the decisions that they do. I’m finding that behavioral economics informs both my understanding of how players approach decisions in games, and how I myself am making game design decisions.

Week01: Irrationality

1.1 Visual and Decision Illusions

Decision Illusions: Our brains have evolved to be very good at some things, and quite bad at others. The rational decision making parts of our brains appear to be just as susceptible to falling for illusions as the vision processing parts of our brains. The rest of this course examines different ways in which our decision making faculties can be tricked into making irrational decisions.

Playtest Shield: Playtesting is a cornerstone in game development that is focused on finding divergences between designer expectations and player experiences. However decision illusions can lead both players and game designers to act irrationally. Understanding the limitations of our brains can help inform the design of our playtesting sessions, and help us make sesnse of their results.

1.2 Defaults

Preference for Defaults: People often prefer to avoid making decisions (especially hard ones). This is one explanation for why organ donation rates correlate so strongly with whether a country uses an opt-out registration forms, and why snail mail response rates are often so low. Despite this, you can probably imagine that very few people attribute their organ donation status to whether they had to opt-in or opt-out of it. Studies show that this preference for defaults generally increases as the complexity or difficulty of a decision increases.

Player Defaults: This is an interesting bias that I am now actively watching for when players take actions in games. As anecdotal evidence, I have seen new players ignore buying cards in the game King of Tokyo (which I consider a great game). I suspect this was due to the work involved in reading the rules on each available card, considering how those rules might effect their chances of winning, and then having to chose between three available options.

Genre Tropes: Designers are every bit as likely to prefer defaults as players, and often without realizing it. Most game designs are naturally influenced by other games. In fact there are entire genres of games that share many common attributes. As soon as your brain connects your original game design to another existing one, you inherit a set of defaults for how each part of your game could work. It’s easy to overlook these subconscious influences, so I encourage you to actively search for design decisions that conform to this kind of default. Then evaluate whether there are any alternatives that might make your game even more compelling.

1.3 Do We Know Our Preferences

Accumulating Decisiveness: In many cases, we are surprisingly unaware of our own preferences. When this happens, we look to our environment for clues about what our preferences and values might be. One example of this is our tendency to follow defaults (as described above). Another example is the effect of being asked to list 3 or 10 things that you like or dislike about something. The relative ease of listing 3 reasons for a preference is likely to help reinforce that preference. Whereas the difficulty in listing 10 reasons for a preference is likely to weaken or even reverse your convictions about that preference.

Suspect Testimony: Although player feedback is one of the most valuable resources you can collect as a game designer, you need to be suspicious of all player testimony. Players won’t necessarily try to lead you astray, but they can be very creative in crafting their own narrative to explain a particular feeling or experience. Try to identify any environmental clues that may bias your players’ responses. And avoid asking leading questions about your game (unless your are trying to impress a publisher instead of improve the quality of your game).

1.4 Choice Sets and Relativity

Decoy Effect: Another environmental clue that our brains extract meaning from is the set of options that we are presented with. If we answer a survey question near one end of a scale or the other, that’s likely to influence our perception of our own relative standing. A more surprising example is when a decision that is typically split 50/50 between two options becomes unbalanced by the addition of a third clearly inferior alternative (that is similar to one of the original options). This is because our brains exaggerate the contrast between the similar choices to make one of the original options (the option that is similar to the inferior choice) more attractive than it was without the seemingly extraneous inferior alternative next to it.

Baseline Design: I’ve often heard novice designers comment about making their games more challenging by introducing some form of trickery or confusion. In my experience this rarely helps, on account of how few people enjoy being tricked or confused. Instead, this lesson should serve as a reminder for developers to make sure they provide players with enough information to develop baselines for the comparisons and decision making you expect them to perform. At the same time, developers should be watching for signs that players are consistently making poor estimations.

1.5 The Long-lasting Effects of Decisions

Self Herding: The history of familiar decisions that we’ve already made is another hidden influence on our decision making processes. Although we generally have a good memory for the decisions that we’ve made, our memories are often incomplete in terms of the circumstances that lead us to make those decisions. Each time we make a decision, we inadvertently bias ourselves to make that same decision again in the future. And this effect is fairly independent of otherwise important differences in context and circumstance. In order to help players overcome this bias, game designers need to design clear and timely feedback that directs players’ attention to the contextual differences that explain why one decision may lead to many different outcomes.

High Achievers: Another way I can relate to this self herding phenomena is as a game player. The trial and error mindset that I approach many games with represents a conscious effort to repeat the kinds of decision making that produce positive results. However this often leads to me to a local maxima in terms of skill development. External achievement systems have become a common way for designers to encourage players to experiment with a wider variety of strategies. I certainly hope that designers continue to experiment with ways to more tightly integrate these kinds of incentives into games.

1.6 Learning from our Mistakes

Take Away: Our first week’s lessons conclude very close to were we started. Our brains make a lot of mistakes, and our intuition about how and when those mistakes occur is pretty bad. This understanding should grant us some humility. We should question our intuitions often, and experiment with less intuitive alternatives regularly.

Counter Intuitive Design: In game development, some of this experimentation is built into playtesting. But as designers, we heavily rely on our intuitions throughout the design process. Our intuition is a tool that helps us manage the size of the design space that we work within. It’s a valuable tool to utilize, but one with limitations that require our attention. We need to keep in mind: our preferences for defaults, how easily our decisions can be biased, and the long-lasting effects of the decisions we make. Each of these lessons can make us better game designers.

Week02: The Psychology of Money

2.1 Opportunity Cost

Shadow Values: Every time we spend time or money on anything, we lose the ability to spend that time or money on anything else. Because “anything else” is such a vast set of alternatives, our brains consider only a small subset of those alternatives with each decision we make. This “cheating” can lead to irrational decision making. For instance, participants in one study showed a preference for a superior quality stereo that costed $300 more than an alternative. However the inferior stereo was preferred by participants after it was bundled with $300 in music and priced the same as the better quality stereo. One explanation for this result is that participants were not considering all of the possible uses for the $300 savings provided by the inferior stereo in the first offer.

In-Mind Purchases: Some games present the management of scarce resources and opportunity costs as a central challenge. In games like Le Harve and Star Craft 2, player success depends heavily on how well players appraise the changing values and long term opportunity costs of their actions. Helping players organize and remain cognizant of these trade-offs is especially important in such games. Other games treat purchases as rewards. In a game like Zelda, you can always slay a few more monsters to earn some extra money (Rupees), and it’s generally in your best interest to buy all of the most expensive stuff you can afford. In these games, incentives can become more salient by clearing conveying their specific benefits. As an example, instead of promising a mystic artifact or a chest of gold, promise a sword that does twice the damage of the player’s current sword.

2.2 Relativity

Relatively More: We touched on the brain’s preference for relative over absolute comparisons while discussing decoy effects and the importance of establishing baselines in section 1.4. But even with good baselines in place, we are likely to compare differences in terms of relative percentages over absolute differences. For instance, consider how much influence a $5 coupon would have over your decision to shop at one store instead of another. A $5 coupon for a $7 sandwich is likely to persuade us more than a $5 coupon for a $2000 television. This is because of the difference in relative savings (71% versus 0.25%), since there was no difference in absolute savings ($5 versus $5).

Delusions of Progress: I believe this is a lesson that many designers are in tune with. Computer role playing games (among others) commonly use exponential curves to ramp up the amount of damage a player deals, the amount of gold they collect, and the benefits of the equipment they find or purchase. Regularly doubling these kinds of stats provides players with a much greater sense of progress than the smaller feeling increments of a linear growth curve. The deck building card game Ascension utilizes another trick to provide a similar sense of growth. This game includes many cards that are two to three times as powerful as others. But when played within a hand of more mediocre cards, one of these doubly powerful cards really only represents a 20% increase in the power of your entire hand.

2.3 The Pain of Paying

Where it Hurts: The loss of money when making a payment can be so upsetting that it colors our opinions of the goods and services we purchase. What’s interesting is that the intensity of this pain can be manipulated by the proximity, frequency, and forms of the payments that we make. For instance, consider paying for a vacation on a cruise ship. Would you prefer to 1) pay in advance, or upon returning, 2) pay in one lump sum, or make daily payments, and 3) pay with a credit card, or with cash. The first option in each case should result in the least painful experience and thereby help you enjoy your vacation more fully.

For Better or Worse: Presumably the purchase options in a game are there to make the game more fun, and should be made as painless as possible. One possible exception to this rule is that some purchasable goods may be so powerful, that you want to discourage their use. In addition to raising the price of these goods, you can consider changing how they are paid for. In worker placement games like Stone Age, there is a per-round food cost associated with each member of tribe, instead of a one time up-front cost to acquiring them. In Fallout 3, there are many disposable objects that either degrade with use or permit only a single use. These objects need to be acquired frequently but can usually be traded for, which is less painful than spending your valuable money (caps) on them.

2.4 Mental Accounting

Money Buckets: Mental accounting is another trick that our brains utilize to manage the otherwise overwhelming number of alternatives involved in making purchase decisions. The idea is that once we allocate or budget money for a particular use, we have a hard time thinking about using that money for any other purpose. The only game experiences I can relate to this, include complex simulation-based games. In the indie computer game Democracy 2 you govern a nation by selectively implementing policy changes. For instance your country might have a pollution problem, so you increase a gas tax with the intention of later spending that revenue on green technology research. Imagine that this tax significantly improves air quality on its own, but has the side effect of hurting employment. Investing in public transportation or reducing the existing tax rate might become more beneficial investments. But we’re often stubborn about spending money intended for a specific use on anything else.

2.5 Fairness and Reciprocity

What you Pay For: This lesson includes two biases in our sense of fairness while purchasing goods and services. First, when a service takes a long time to render, we’re more likely to attribute that time to the difficulty of the service than the incompetence of the provider. This can lead us to feeling justified in paying more money for what may actually be an inferior service, or vise versa. A similar phenomenon occurs when purchasing goods. We’re more likely to associate the value of a good with its apparent marginal cost, than any one-time start-up costs. This might explain why some people are frustrated with the pricing of many ebooks in relation to their paper counterparts. In both of these biases, we are utilizing one source of available information as a substitute for another independent source of missing (or at least more speculative) information.

Cost of Investment: Fairness in games often reduces down to how each player’s chance of winning is influenced by their skill in playing. So when random events inordinately advantage or disadvantage a player, this is often seen as unfair. The middle ground case is when games present random threats or opportunities that only effect properly prepared players. Such players may be lauded for their skill in preparation, or considered the benefactors of good luck and fortune. From the research, it seems like one influence on this determination might be the cost of their preparation. Another factor might be the likelihood of the particular threat or opportunity’s occurrence.

2.6 Loss Aversion and The Endowment Effect

Ownership Effects: When we acquire ownership of an object, we quickly familiarize ourselves with the advantages of that new ownership. We then adjust our baselines for happiness to include all of those new-found benefits. An interesting consequence is that we commonly over-value the objects in our possession. This also results in loss aversion, because the loss of our over-valued possessions is more painful than the acquisition of these objects was pleasureful.

Thematic Consequence: An argument could be made that the trade-off between rewards and punishments occurs in every game. Games commonly involve earning points of some kind(s), but could just as easily be about avoiding the loss of points. Mathematically, you simply multiply the points you are earning by negative one and they become losses. But the experience of trying to avoid losing your possessions is often very different from that of amassing wealth and power throughout the course of a game.

2.7 Market and Social Norms

Business or Pleasure: When fiscal and social economies interact with each other, the result is not always complimentary. For instance, an offer of a few dollars is likely to make your friends less willing to help you move heavy furniture, than if they were just doing it to be nice. The common practice of removing price tags from gifts is another example of where there can be friction between these two economies.

Play Nice: Some competitive games explicitly encourage players to work together. For instance, you can trade resource cards with your opponents in Settlers of Catan. Mutually beneficial trades can be negotiated in this game, but a competitive player should only accept such trades from players they are beating (or will be after their trades). Once this kind of exchange is made, there’s rarely any expectation of continued cooperation since each player is presumably acting in their own interest of winning. However in a game like Risk, players can offer each other social “favors” in the form of promising not to attack along a weakened border. This gesture is beyond the game’s rules, and is probably tied to an expectation of later reciprocation. The line between tactical maneuvers and social offerings of this kind is blurry at best. This makes it critical to observe a wide variety of players and groups of players experience your game through playtesting.

2.8 The Price of FREE

Favorite Price: It’s no secret that people love getting stuff for FREE. We’ve probably all stood in ridiculously long lines, filled out complicated surveys and rebate forms, and payed exorbitant handling fees for the satisfaction of getting something for “nothing”. So I doubt many people are surprised when they learn that this magical price of zero occasionally solicits irrational behavior.

Pay to Play: The economies within games are a fiction that helps explain rule sets, and incentivize certain behaviors. As a game designer, you can add cost to or remove cost from every possible action. In the game Sim City for instance, what if players could build roads for free? Or what if roads carried with them a recurring maintenance fee? Presumably both of these changes should impact how players layout their virtual cities. Monopoly‘s $200 for passing GO is another interesting case. Couldn’t the costs of real estate and other fees be changed so players typically spend $200 less per trip around the board? Or does this fiction of receiving a free $200 make the game more enjoyable?

2.9 Micro-Payments

The Bad News: One problem with micro-payments is that they amplify the pain of paying by requiring us to make many purchase decisions instead of just a few. This can lead to more frugal spending, and less enjoyment of the items purchased. Within games, purchases are just one of many kinds of player decisions. A big part of the game designer’s job is to strike a balance between the number and frequency of decisions a player must make, the difficulty of making those decisions, and how they contribute to the larger experience of the game. One game design lesson from this research is that many smaller decisions may add up to more than the sum of their parts in terms of the burden that they place on players.

The Good News: There are techniques for mitigating the pain of paying. Charging upfront for a subscription forces payers to allocate money to be spent in a particular way (ie. mental accounting). This helps reduce the number of alternate uses for this money the payer must consider as opportunity costs. Providing a limited number of price points in another way that sellers can make micro-purchase decisions easier. This allows buyers to focus on their preferences while purchasing, instead of having to weigh their preferences against many small differences in price. I suspect that similar techniques could be applied in game design. However game designers have many more tools to help ease their players’ burdens. The most blunt of these tools might be removing the need for making any particular decision all together.

[Thanks for reading. Please, let me know what you think about this article, if you have questions, and whether you’d like to see more of the material from this class covered in the same way.]

Very interesting stuff! I’ve actually been reading Daniel Kahneman’s Thinking, Fast and Slow recently, which also discusses systematic errors in decision making. I’d highly recommend it. In fact, I’ve already started a blog post applying it to game design that I’m hoping will go up in a week or two ;)